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RBI committee recommends 11.2% increase in WMA limit for states
Sep-30-2026

In view of growing size of states budget, a Reserve Bank of India (RBI) committee recommended raising the aggregate Ways and Means Advances (WMA) limit for states to meet temporary cash mismatch by 11.2 per cent to Rs 67,839 crore. The RBI has been extending WMA to the State Governments since 1938 for managing temporary mismatches in their cash flows. Based on the recommendations made by the previous Advisory Committee (Chairman: Sudhir Shrivastava), the RBI had revised the aggregate WMA limits for the states from Rs 32,225 crore to Rs 47,010 crore, effective from April 1, 2022. Later, based on recommendations of another RBI-constituted Group of select State Finance Secretaries, the RBI revised the aggregate WMA limit to Rs 60,1182 crore with effect from July 1, 2024.

In the 35th Conference of the State Finance Secretaries (SFS) held in September 2025, the RBI decided to set up an Advisory Committee on WMA for state governments, post release of the report of the Sixteenth Finance Commission. The Committee (Chairman: I S N Prasad) analysed various fiscal parameters, such as total expenditure and revenue receipts, for identifying the ‘Base’ for calculation of WMA limits.

The committee is of the view that it is more appropriate to fix the state-wise WMA limits based on their ‘Revenue Receipts’ as compared to ‘Total Expenditure’. The Committee recommends revision in aggregate WMA limit for the states to Rs 67,839 crore from the existing limit of Rs 61,008 crore, an increase of 11.2 per cent over the current limit. For arriving at the revised WMA limits, the ‘base’ has been taken as adjusted revenue receipts (revenue receipts minus lottery-related expenditure plus net expenditure on natural calamities, if it is positive) using accounts-level data (2022-23 to 2024-25).

The RBI may consider revising the WMA limits annually based on the methodology recommended by this Committee. The Committee also said that the next Committee to review the WMA to state governments be constituted after the release of the Seventeenth Finance Commission’s report. The RBI constituted the Advisory Committee on Ways and Means Advances to State Governments on April 30, 2026, to review the existing WMA Scheme for the State Governments and to examine other related issues.
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